On Friday, President Bush announced the nomination of Steve Preston as Secretary of HUD.  Currently, Mr. Preston serves as Administrator of the Small Business Administration.  If confirmed, Mr. Preston will succeed Alphonso Jackson who is stepping down effective last Friday.

The announcement of a new HUD Secretary is important news.  As the White House continues to search for ways to solve the housing crisis, new leadership at HUD provides an opportunity to jumpstart key efforts and explore new options. MBA will continue to focus on FHA modernization as a top priority as the new Secretary takes over.  

Last week MBA had a significant presence on Capitol Hill as our National Policy Conference brought mortgage bankers from across the nation to meet with lawmakers. MBA members met with over 175 congressional offices, making our case on ways to stabilize the market, help borrowers stay in their homes, and prevent future problems in the market.

In the midst of our conference, MBA also testified twice last week in Congress.  MBA Chairman-Elect David Kittle, CMB, and MBA's Vice Chairman, Rob Story, Jr., CMB, both appeared on Capitol Hill to speak on mortgage servicing issues relating to the current credit crisis.

This week will be yet another busy week, as we prepare for a markup of Chairman Frank's FHA "rescue" legislation, and expect two Senate Banking Committee hearings on turmoil in the credit markets.

President Bush Nominates Steve Preston as HUD Secretary

On Friday, April 18, President Bush announced his nomination of U.S. Small Business Administration (SBA) Administrator Steve Preston to be Housing and Urban Development (HUD) Secretary.  Mr. Preston was sworn in as SBA Administrator in July 2006, after unanimous approval by the Senate.  Prior to his current position, Mr. Preston was Executive Vice President at the ServiceMaster Company and Treasurer at First Data Corporation. According to the White House, Mr. Preston's track record in the private sector, as well as accomplishments made during his tenure as Administrator for SBA, have demonstrated deep financial and capital markets knowledge necessary to act aggressively to help struggling homeowners keep their homes.  Mr. Preston has vowed to lead HUD in its mission to support homeownership by working with Congress to advance legislation that works towards this end. 

House Financial Services Committee Introduces Housing Legislation

On Thursday, April 17, Members of the House Financial Services Committee introduced legislation to address the housing market.  The legislation combines two bills, H.R. 5830, the "FHA Housing and Homeownership Retention Act" and H.R. 5818, the "Neighborhood Stabilization Act of 2008."  The former, which was originally introduced by Chairman Frank in March, would enable the Federal Housing Administration (FHA) to provide up to $300 billion in new guarantees to refinance loans for borrowers facing foreclosure.  The bill calls on lenders to voluntarily write down the principal balance of loans.  The Neighborhood Stabilization Act that was originally introduced by Subcommittee on Housing and Community Opportunity Chairwoman Maxine Waters (D-CA) will allocate HUD-administered loans and grants to states and cities to purchase and revitalize owner-vacated, foreclosed homes.  The full committee is expected to hold a markup session and vote on the two measures Wednesday, April 23, at 10:00 a.m. and Thursday, April 24.

MBA Releases FHA Modernization Side-by-Side

On Friday, April 18, MBA released an updated FHA modernization bill side-by-side, comparing provisions of H.R. 1852, which passed the full House in September; S. 2338, which passed the Senate in December; and H.R. 3221, an amendment that the Senate passed on April 10 as part of the Foreclosure Prevention Act of 2008. 

MBA Testifies on Mortgage Servicing Issues

On Tuesday, April 15, MBA Vice Chairman Rob Story, Jr., CMB, testified before the House Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises hearing on Chairman Paul Kanjorski's (D-PA) and Representative Mike Castle's (R-DE) bill, the "Emergency Home Loan Modification Act."  This bill would provide a servicer a safe harbor from certain legal liabilities if the servicer engages in loss mitigation procedures.  While MBA appreciates efforts to reduce contractual and fiduciary risks servicers face providing the full range of loss mitigation options, MBA remains concerned that the alteration of contracts would impact future borrowers and liquidity in the marketplace.  It is unclear whether benefits of H.R. 5579 outweigh the potential harm that the bill could cause the market during a time when stability and liquidity are essential for the secondary market.

On Wednesday, April 16, MBA Chairman-Elect David Kittle, CMB, testified before the House Subcommittee on Housing and Community Opportunity hearing on H.R. 5679, the "Foreclosure Prevention and Sound Mortgage Servicing Act of 2008," which requires certain loss mitigation activities prior to foreclosure.  Several problematic elements of the bill include a backdoor moratorium on foreclosures, rewriting mortgage terms, and enabling first mortgages to subsidize second mortgages and unsecured debt.  MBA opposes this bill, as it would increase mortgage rates, reduce availability of credit, and deter investor interest in mortgage securities.       

OFHEO Signs Consent Orders with Former Fannie Mae Executives

On Friday, April 18, the Office of Federal Housing Enterprise Oversight (OFHEO) reached an agreement with former Fannie Mae CEO Frank Raines, former CFO Tim Howard and former Controller Leanne Spencer in the form of Consent Orders regarding accounting and internal control problems.  According to OFHEO, the alleged charges, filed in December 2006, included "inappropriate earnings management" and the release of misleading financial reports.  Combined, the three consent orders provide $31 million in penalties and loss of benefits.

2008 National Policy Conference Recap

MBA members took the industry's message to Capitol Hill last week during the National Policy Conference in Washington, D.C.  Over 150 members gathered to be briefed on the legislative outlook and hear two leaders on real estate finance issues in the House, Representative Jeb Hensarling (R-TX) and Representative Brad Miller (D-NC), discuss their views on the situation in the housing market.

Attendees also took MBA's message directly to lawmakers in over 175 separate visits to House and Senate offices, including House Speaker Nancy Pelosi (D-CA), Senate Banking Committee Ranking Member Richard Shelby (R-AL), Majority Leaders Harry Reid (D-NV) and Steny Hoyer (D-MD), Minority Leader John Boehner (R-OH), and House Financial Services Chairman Barney Frank (D-MA) and Ranking Member Spencer Bachus (R-AL).  Association members discussed with legislators ways to help stabilize the market, assist distressed borrowers and renters, and prevent future problems.  Please see the attached documents to view MBA's Agenda to Stabilize the Housing Market and an update on the Commercial and Multifamily mortgage market, which were distributed to Congress.

For more information, please contact Adam Fromm at (202) 557-2858 (afromm@mortgagebankers.org).

Freddie Mac to Buy Billions in "Conforming Jumbo" Loans

On Thursday, April 17, Freddie Mac announced plans to buy billions in so-called "conforming jumbo" loans for its portfolio from Wells Fargo, Chase, CitiMortgage and Washington Mutual.  Freddie Mac estimates this will support the financing of $10-$15 billion in new jumbo mortgages in 2008.  Restrictions include a 90 percent loan-to-value (LTV) and $100,000 maximum cash out for refinancings.  This marks the first publicized large-scale effort to jumpstart the stalled jumbo mortgage market under the Economic Stimulus Act.

In related news, on April 17, Fannie Mae announced that it has 90-day commitments for conforming jumbo whole loans and mortgage-backed securities (MBS).  Fannie Mae has been providing conforming jumbo whole loan pricing since April 1.

Another Important Appeals Court Victory in Firm Offer of Credit Case

This week, in a "firm offer of credit" decision under the Fair Credit Reporting Act (FCRA) the 7^{th U.S. Circuit Court of Appeals affirmed the district's court's judgment for the creditor in Bruce v. Keybank.  The Court held that the value of a creditor's offer is not relevant for purposes of the "firm offer" provision but whether it is "firm."  In that connection, the Court rejected the argument that pre-screened mailers must contain all material terms.  The court held that the question posed by the law is whether the offer will be "honored" (if verification of the consumer and collateral checks out) not whether all the terms appear in the initial mailing.   MBA and other industry groups filed an amicus brief supporting Keybank's position with the Court.} 

^{FHFB Allows FHLBs to Use Affordable Housing Program for Subprime Refinancing}

^{As reported last week, on Wednesday, April 16, the Federal Housing Finance Board published a proposed rule in the Federal Register to temporarily allow the Federal Home Loan Banks (FHLBs) to use Affordable Housing Program (AFH) funds to subsidize the refinancing or restructuring of low- or moderate-income households' subprime or nontraditional mortgages held by FHLB members or their affiliates. The Finance Board estimates that if the FHLBs were to use the maximum proposed refinancing AHP set-aside authority in 2008, they could provide almost $75 million to assist some 7,500 households facing possible loss of their homes (assuming an average subsidy of $10,000 per household).  The new authority will expire on June 30, 2011. MBA will submit comments before the June 16, 2008 deadline for public comment.}

^{MBA Participates in National Governors Association Webcast}

^{On Wednesday, April 16, MBA Vice President of Legislative Affairs Francis Creighton participated in a webcast sponsored by the National Governors Association (NGA) on the topic of "Federal Policy to Address Foreclosures: What States Need to Know."  This webcast demonstrated the interest and activity of state officials seeking ways to address mortgage related policy issues in the absence of federal actions.  The discussion focused on current market conditions, outlook for Congressional and Administrative actions, and the potential impact on states.  Mr. Creighton discussed MBA's support for action at both the federal and state levels that will stabilize the market, provide assistance to borrowers, and prevent future problems in the mortgage market.  To view the full webcast, click here.} 

^{Additionally, on May 28-29, MBA Chairman Kieran Quinn, CMB, will participate in a NGA-sponsored State Summit on Foreclosures and Housing Solutions in Arlington, Virginia.  Mr. Quinn will participate on a panel that will focus on policies to prevent future foreclosures.}

^{MBA Submits Letter to NY Banking Superintendent on Proposed Legislation}

^{On Tuesday, April 15, MBA Vice President of State Legislative Affairs Paul Richman submitted a comment letter to New York Banking Superintendent Richard Neiman on proposed subprime and foreclosure legislation.  The legislation consists of comprehensive reforms aimed to temper foreclosures and tighten lending practices in New York, including the addition of process requirements for borrowers; new requirements on mortgage servicers; and new obligations on mortgage servicers who seek to enforce their legal rights as holders of a mortgage in the instance of default.  Additionally, the legislation would expand existing protections and establish new standards governing lending practices.  MBA expressed concern over the availability and additional costs of mortgages that would ensue should the legislation be enacted.  Moreover, MBA requested an opportunity to meet with Superintendent Neiman to discuss ways to modify harmful provisions of the legislation.} 

^{Baucus and Grassley Unveil Tax Bill}

^{On Thursday, April 18, Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Charles Grassley (R-IA) unveiled comprehensive tax legislation dealing with a large variety of issues.  The bill includes some program extenders supported by MBA, including a 15-year recovery period for leasehold improvements through 2009, as well as the expensing of "brownfields" environmental remediation costs through 2009, both of which expired in December 2007.  The bill has not yet been reported out by the Committee.}